Maruti Suzuki expects production to be hit for second month due to chip shortage

The country's top carmaker Maruti Suzuki said it expects total vehicle production volume in October at two of its plants – Haryana and Gujarat – to be around 60% of normal levels due to a shortage of semiconductors.

Increasing demand for consumer electronics and supply chain disruptions across the globe have led to an acute shortage of chips, forcing a number of car companies to drastically cut production as they try to secure limited semiconductor supplies.

"Owing to a supply constraint of electronic components due to the semiconductor shortage situation, the Company is expecting an adverse impact on vehicle production in the month of October’21 in both Haryana and its contract manufacturing company in Gujarat," the carmaker said in a regulatory filing on Thursday.

"Though the situation is quite dynamic, it is currently estimated that the total vehicle production volume across both locations could be around 60% of normal production," the statement noted. Maruti and rival Mahindra and Mahindra had also warned of a hit to their production for September due to the shortage.

Meanwhile, the Consumer Electronics and Appliances Manufacturers Association (CEAMA) said that the domestic appliances and consumer electronics industry expects the shortage in components such as semiconductors and chips, not only to last through 2022 but also to stretch into 2023.

Due to the problems in the industry, automakers are focussing on making high margin models and have passed on some of the costs to customers. All top carmakers in India have increased prices multiple times in 2021. Globally, Ford Motor Co, Honda Motor Co Ltd, General Motors Co and Volkswagen AG have been caught off guard by the chip shortage, forcing many to idle or curtail production.

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